1 00:00:00,000 --> 00:00:05,120 So I want to share something interesting with you about pensions. 2 00:00:05,120 --> 00:00:11,160 Before I do that, I just want to let you know where I am today because it is related actually. 3 00:00:11,160 --> 00:00:13,640 So I'm on a seven hour drive today. 4 00:00:13,640 --> 00:00:18,640 So I'm going from the world to Whitby return journey. 5 00:00:18,640 --> 00:00:21,360 I want to set out this morning. 6 00:00:21,360 --> 00:00:28,360 I thought to myself, do I drive the seven hours at an average of 70 miles an hour? 7 00:00:28,360 --> 00:00:34,360 Mostly motorways or do a slow down limit and go at 60 miles an hour. 8 00:00:34,360 --> 00:00:38,640 And the things I am going to go at 60 miles an hour and have been going at 60 miles an hour. 9 00:00:38,640 --> 00:00:42,520 I've just pulled into services, weather be at the bones. 10 00:00:42,520 --> 00:00:47,160 So the things I have to consider when I made this decision is a couple of things really. 11 00:00:47,160 --> 00:00:51,720 One is I do this journey quite a lot and I reckon if I drive at 60, 12 00:00:51,720 --> 00:00:55,560 I'll probably save between six and seven pound in fuel. 13 00:00:55,560 --> 00:00:58,160 So that's one thing to consider. 14 00:00:58,160 --> 00:01:02,600 And the second thing to consider is I'm less likely to crash and die. 15 00:01:02,600 --> 00:01:08,560 Okay, so what order would you put them two things in? 16 00:01:08,560 --> 00:01:15,360 Now, I've worked all my life and mismanaged, management, mismanaged it effectively. 17 00:01:15,360 --> 00:01:22,920 And for me, the order would be most important would be the six to seven pounds savings. 18 00:01:22,920 --> 00:01:27,160 And the least important would be the crash and die bit. 19 00:01:27,160 --> 00:01:32,080 Now, some that might seem unusual, but I think it's important to understand 20 00:01:32,080 --> 00:01:34,920 and this is related to where I'm going with pensions as well. 21 00:01:34,920 --> 00:01:38,000 That risk is multifaceted. 22 00:01:38,000 --> 00:01:42,840 So it's not just a single number, it's two numbers multiplied together. 23 00:01:42,840 --> 00:01:47,760 And then two numbers are the impact of something happening 24 00:01:47,760 --> 00:01:50,400 and the likelihood of something happening. 25 00:01:50,400 --> 00:01:54,840 And a lot of risk models let you score these at five. 26 00:01:54,840 --> 00:01:59,880 Five is a good number for human beings to get the head around in terms of ranking things. 27 00:01:59,880 --> 00:02:07,920 So if I take the risk around the seven pound of getting that pound, 28 00:02:07,920 --> 00:02:12,360 it's actually an opportunity, but risk and opportunity are two sides of the same coin. 29 00:02:12,360 --> 00:02:21,320 So the likelihood of me getting the six or seven pounds is pretty much 100%. 30 00:02:21,320 --> 00:02:24,280 So I'm going to give it five because I know it's in my control. 31 00:02:24,280 --> 00:02:29,200 I'm going to drive that speed and then know that if I do, 32 00:02:29,200 --> 00:02:33,360 through past history, it saves me six or seven pounds and it's like a journey. 33 00:02:33,360 --> 00:02:37,040 Now, the impact of that is right down at six, seven pounds. 34 00:02:37,040 --> 00:02:38,320 I'm going to give it a two. 35 00:02:38,320 --> 00:02:43,680 Now, it's enough for a pint in the city centre or two pints in my local. 36 00:02:43,680 --> 00:02:44,920 So I'm going to give it a two. 37 00:02:44,920 --> 00:02:49,680 So that means five times two because there's a total risk of 10. 38 00:02:49,680 --> 00:02:52,880 Now, let's take the crash and die thing. 39 00:02:52,880 --> 00:03:00,000 So the impact of that on me would be a five, obviously, I'll be dead. 40 00:03:00,000 --> 00:03:04,040 But the likelihood I know is pretty much a one. 41 00:03:04,040 --> 00:03:05,200 You know, I've been driving on my life. 42 00:03:05,200 --> 00:03:06,520 I've never seen this accident. 43 00:03:06,520 --> 00:03:10,000 There's millions of people on this road today and very few of them will come 44 00:03:10,000 --> 00:03:12,560 anywhere near an accident. 45 00:03:12,560 --> 00:03:15,000 So one times five is five. 46 00:03:15,000 --> 00:03:21,680 So actually, I'm much more likely to take into account the savings in petrol 47 00:03:21,680 --> 00:03:24,120 than I am the likelihood of dying. 48 00:03:24,120 --> 00:03:27,240 OK, so that become apparent. 49 00:03:27,240 --> 00:03:31,040 I want to start talking about where we are today with pensions. 50 00:03:31,040 --> 00:03:36,760 So if I stop random people in the street and I ask them if they buy this thing, 51 00:03:36,760 --> 00:03:41,360 normally, you know, at least nine out of 10 of them would say no, 52 00:03:41,360 --> 00:03:42,920 they never buy these things. 53 00:03:42,920 --> 00:03:47,120 And reality of a check the bank accounts, pretty much all of them will buy these things. 54 00:03:47,120 --> 00:03:50,320 And there's a massive sale on at the moment. 55 00:03:50,320 --> 00:03:54,960 So you probably guess what I'm talking about, given the subject of the talk. 56 00:03:54,960 --> 00:03:57,800 And that's shares. 57 00:03:57,800 --> 00:04:02,440 So at the moment, shares in the American stock market today, 58 00:04:02,440 --> 00:04:06,400 well, Nasdaq's down nearly 12 percent. 59 00:04:06,400 --> 00:04:11,040 The S&P's down around 10 percent over the last couple of weeks, last few weeks. 60 00:04:11,040 --> 00:04:15,720 So what you are, I'm effectively saying is if you're buying today, you get there, 61 00:04:15,720 --> 00:04:19,880 you know, a 10 percent discount on what you'd usually pay for these things. 62 00:04:19,880 --> 00:04:24,840 And the reason most people say they don't spend money each month on shares 63 00:04:24,840 --> 00:04:28,680 is they don't quite know what happens with the pension. 64 00:04:28,680 --> 00:04:37,640 So when you get your pay slip, you generally notice that there'll be a deduction in there for your pension. 65 00:04:37,640 --> 00:04:42,080 And what will have happened is your employer will have taken that money off you 66 00:04:42,080 --> 00:04:48,280 and give it to a pension company, which in turn will have used that to buy shares. 67 00:04:48,280 --> 00:04:54,000 Now, they'll be buying the similar shares to everyone else, you know, 68 00:04:54,000 --> 00:04:56,880 the big stock market to be where most of the money goes. 69 00:04:56,880 --> 00:05:00,720 And that's where the big 10 percent discounts are coming at the moment. 70 00:05:00,720 --> 00:05:08,560 So when I say there's a sale on, it really is a good time at the moment to be invested in pensions. 71 00:05:08,560 --> 00:05:12,520 And the thing with pensions is you tend to invest in them a long time. 72 00:05:12,520 --> 00:05:17,440 And share prices rock it up and they rock it down. 73 00:05:17,440 --> 00:05:26,040 But overall, there's a general trend upwards, which is where we this is why we do so well when we have pensions. 74 00:05:26,040 --> 00:05:30,240 There's that the fact that the stock market goes up gradually over time. 75 00:05:30,240 --> 00:05:36,600 And there's also the fact that it's so tax efficient for us 76 00:05:36,600 --> 00:05:43,520 because the government gives us lots of incentives to contribute to a pension. 77 00:05:43,520 --> 00:05:49,840 Now, if I think about risk and what I was talking earlier at the beginning of this conversation 78 00:05:49,840 --> 00:05:52,800 and we think about what's the risk of buying shares? 79 00:05:52,800 --> 00:05:55,440 Well, again, we've still got this impact and likelihood thing. 80 00:05:55,440 --> 00:06:03,240 So if you've got a nervousness about a particular company that you know your shares are invested in, 81 00:06:03,240 --> 00:06:07,560 then you may look at the impact of that. 82 00:06:07,560 --> 00:06:14,280 So if there's a big problem, how much of my hard and cash is in that particular company? 83 00:06:14,280 --> 00:06:15,760 So that's the impact. 84 00:06:15,760 --> 00:06:20,760 And if you've got a lot of money invested in that single company, it'll have a large impact. 85 00:06:20,760 --> 00:06:25,360 However, if that's just one of a thousand companies that you're equally invested in, 86 00:06:25,360 --> 00:06:30,360 then obviously the trouble in that one company around very little impact overall 87 00:06:30,360 --> 00:06:33,920 because it's only a thousand of your pension investments. 88 00:06:33,920 --> 00:06:36,320 And the second thing is the likelihood. 89 00:06:36,320 --> 00:06:40,280 So some companies are what we call highly volatile. 90 00:06:40,280 --> 00:06:45,920 If you look at the share price over the years, they go up and down like a roller coaster. 91 00:06:45,920 --> 00:06:51,280 And this is to do with the type of industry they're in. 92 00:06:51,280 --> 00:06:54,880 They may be in quite a high risk industry, quite competitive industry, 93 00:06:54,880 --> 00:07:02,120 a lot of changes going on, regulatory change, that kind of thing, fashion trends that can impact the business. 94 00:07:02,120 --> 00:07:08,200 And there's other companies that tick along, make the same products, have steady streams of income 95 00:07:08,200 --> 00:07:14,800 and will gradually go up and gradually go down over time due to how the company's being run. 96 00:07:14,800 --> 00:07:18,440 So when you're thinking about a particular investment, 97 00:07:18,440 --> 00:07:23,720 you need to think about whether you are putting all your monies in a small number of companies, 98 00:07:23,720 --> 00:07:25,480 which will have a bigger impact on you. 99 00:07:25,480 --> 00:07:28,040 And you also need to think about the type of industries you're in 100 00:07:28,040 --> 00:07:35,960 and whether the probability of or the likelihood of them shares going up and down is something that you can stomach. 101 00:07:35,960 --> 00:07:39,560 So if you're risk of a shoe will split your money amongst lots of companies 102 00:07:39,560 --> 00:07:46,760 because the impact of one company going down will have less impact on you as an individual. 103 00:07:46,760 --> 00:07:50,400 And you also might pick some less volatile stocks. 104 00:07:50,400 --> 00:07:53,360 Now, a highly volatile stock might be a startup. 105 00:07:53,360 --> 00:07:58,000 So for example, you know, you're looking at a company that's making a cancer drug. 106 00:07:58,000 --> 00:08:04,240 Now, there's a chance that that will go to the moon and they'll find a cure for cancer. 107 00:08:04,240 --> 00:08:10,680 And there's a chance that it won't get through the research phases and the company will just dissolve and you've lost all your money. 108 00:08:10,680 --> 00:08:15,120 So that's a type of highly volatile high reward. 109 00:08:15,120 --> 00:08:20,440 If you're lucky, most of the time you're just going to lose early cash. 110 00:08:20,440 --> 00:08:25,040 Now, you'll probably think, well, I just my money disappears at my payslip every month of the dollar. 111 00:08:25,040 --> 00:08:26,320 What happens to it? 112 00:08:26,320 --> 00:08:30,200 And that's probably because you've not really looking, though, to be honest, 113 00:08:30,200 --> 00:08:35,760 because if you do log on to your pension website, you'll find that with most pensions, 114 00:08:35,760 --> 00:08:40,320 there's the default scheme, which most people go in and just leave it there. 115 00:08:40,320 --> 00:08:45,840 But you can go in and you can you can look at the different type of investments. 116 00:08:45,840 --> 00:08:47,760 So you can look at how it's diversified. 117 00:08:47,760 --> 00:08:53,080 You can look at, you know, for example, you might want to not invest in tobacco 118 00:08:53,080 --> 00:08:56,640 or you might want to not invest in property if you think that's not going to do well. 119 00:08:56,640 --> 00:09:04,760 And you know, it is worth having a look at your investments to see if they sit with you as a set of investments, 120 00:09:04,760 --> 00:09:06,120 which you're comfortable with. 121 00:09:06,120 --> 00:09:10,640 And also, if you think they're in the right kind of risk profile when we're talking risks, 122 00:09:10,640 --> 00:09:14,680 bringing the impact and the likelihood of something happening. 123 00:09:14,680 --> 00:09:17,560 OK, so here's a good time to be buying. 124 00:09:17,560 --> 00:09:21,960 I'll put your money into into pensions at the moment because pensions generally 125 00:09:21,960 --> 00:09:23,800 can get vested in shares. 126 00:09:23,800 --> 00:09:25,640 They're running a discount at the moment. 127 00:09:25,640 --> 00:09:28,880 So when you buy in now, you're buying low. 128 00:09:28,880 --> 00:09:30,560 I hope that was useful. 129 00:09:30,560 --> 00:09:33,920 So I'm off to Whitby now and I'll catch you all later. 130 00:09:33,920 --> 00:09:39,400 Oh, by the way, someone commented that they thought it was unwise me driving. 131 00:09:39,400 --> 00:09:43,720 Now, for me, the risk profile of talking and driving is fairly low. 132 00:09:43,720 --> 00:09:47,120 And as an individual, I was quite happy to take that. 133 00:09:47,120 --> 00:09:51,360 However, the risk of annoying some of you guys who prefer me not to do that 134 00:09:51,360 --> 00:09:52,280 is much greater. 135 00:09:52,280 --> 00:09:54,520 And I'd rather have you listening to my channel. 136 00:09:54,520 --> 00:09:59,360 So the risk assessment for me was let's not do videos when I'm driving 137 00:09:59,360 --> 00:10:01,280 just because it will annoy you a lot. 138 00:10:01,280 --> 00:10:02,840 All right, see you again soon. 139 00:10:02,840 --> 00:10:22,360 Cheers.